Katzenberg: Movies ‘Suck’ Right Now

DreamWorks Animation CEO laments state of movie industry, says economy and evolving distribution channels have consumers in a state of uncertainty

Despite the strong opening weekend box office for Harry Potter and the Deathly Hallows — Part 2, and shadowed by usual suspects Transformers: Dark of the Moon,Pirates of the Caribbean: On Stranger Tides, The Hangover Part II, Fast Five and Cars 2, among others, DreamWorks Animation CEO Jeffrey Katzenberg says the domestic movie industry is in disarray.

In a July 19 chat with Fortune magazine editor Andy Serwer, Katzenberg said that despite a systemic change in the way consumers consume movies, including purchasing DVDs and Blu-ray Disc, the industry has been undermined by a recent slate of movies more valued for their marketability and commerce potential than quality.

“Let me have a show of hands of people that would say the last seven or eight months of movies is the worst lineup of movies you've experienced in the last five years of your life,” Katzenberg said. “They suck. It's unbelievable how bad movies have been, right? I mean, it's just I haven't seen a run of this, a crop of movies.”

Katzenberg, who did not identify the movies he considered trash, said television — specifically cable and satellite — has taken the lead in producing compelling original programming. He called AMC’s “Breaking Bad” the best show on TV.

“It's a very entrepreneurial world, and I think you will see that right itself with time,” he said. “But, right now it's a particularly dreary moment.”

Richard Greenfield, analyst with BTIG Research in New York, said Katzenberg’s mid-year comments underscore changes that need to be made in home entertainment and theatrically. He said the average moviegoer has reduced their annual visit to the theater by 20%.

Studios, Greenfield said, should reduce the number of 3D releases and “eventize” a select number of major 3D releases instead of releasing as many 3D movies as possible for short-term incremental revenue.

Greenfield, who linked Katzenberg’s comments in his blog post, said studios also have to lower the price on electronic sellthrough to about $8 per title from $15 to $20 currently charged.

“Without a dramatic change in electronic sellthrough pricing, the Ultraviolet initiative (cross-platform digital lockers) will be ‘dead on arrival’ and the entire sellthrough home entertainment business will evaporate within the next five years,” Greenfield wrote.